Bushmiller v. Schiller

• Decision Date: 08 February 1977
• Docket Number: No. 544,544
• Citation: 368 A.2d 1044,35 Md.App. 1
• Parties: Joseph BUSHMILLER v. Eunice Myrta SCHILLER.
• Court: Court of Special Appeals of Maryland

Page 1

35 Md.App. 1

368 A.2d 1044

Joseph BUSHMILLER v. Eunice Myrta SCHILLER.

No. 544.

Court of Special Appeals of Maryland.

Feb. 8, 1977.

J. Earle Plumhoff, Towson, for appellant.

No appearance for appellee.

Argued before LOWE, MELVIN and LISS, JJ.

MELVIN, Judge.

The dispute in this case is over which of the parties to a real estate contract is entitled to a $13,000 deposit initially received by the seller (appellant) from the buyer (appellee) as part payment of the $130,000 purchase price for a residential property located in Baltimore County. By suit and counter-suit, each party sought judgment against the other for the amount of the deposit. After a bench trial in the Circuit Court for Baltimore County (Proctor, J.), the buyer and original plaintiff, Mrs. Eunice Myrta Schiller, emerged victorious with a judgment for $13,000 against the seller and original defendant, Mr. Joseph Bushmiller. Judgment was also entered against Mr. Bushmiller in his counter-suit. Aggrieved by the results, Mr. Bushmiller has appealed to us to set aright what he perceives as a wrong decision by the trial court.

The dispute over the deposit had its genesis when Mrs. Schiller won 'a million dollar lottery' in the Maryland State Lottery, entitling her to receive $50,000 a year for 20 years. Not long after this fortuitous happening, she entered into a written contract with Mr. Bushmiller, dated 25 July 1975, to purchase his house for $130,000. The contract provided for the payment of a deposit of $13,000 to be applied as part payment of the purchase price. Settlement was to be within 45 days and '(i)f the Purchaser . . . fail(ed) to make full settlement', the deposit was to be 'forfeited at the option of the Seller, in which event the Purchaser shall be relieved from further liability . . ..'

The contract further provided that,

'This contract is subject to the ability of the Purchaser to secure (within 10 days), a written commitment for . . . (a) first mortgage secured on said premises in the amount of $100,000, for a term of Twenty (20) years, and bearing interest at the rate of prevailing per annum (sic).

'Purchaser utilizing a loan agrees to make application immediately and file all necessary papers that are required to complete processing, including resubmission and appeal where necessary, and agrees that failure so to do shall give the Seller the right to declare the deposit forfeited . . ..'

In her suit to recover the deposit Mrs. Schiller alleged that she 'was unable to obtain the necessary financing and advised the Defendants and each of them and demanded the refund of the deposit monies and . . . Defendants have failed and refused to return said monies'. The gravamen of Mr. Bushmiller's counter-suit was that Mrs. Schiller 'was obligated under the terms of the aforesaid Contract to act in good faith in securing a written commitment for a first mortgage within ten (10) days from the date of the Contract, and said Counter-Defendant wholly failed and refused to act in good faith to secure the said mortgage commitment, notwithstanding that mortgage monies on the terms required under the contract were readily available to the Counter-Defendant'. By a 'Stipulation of Counsel' filed prior to trial, Mr. Bushmiller's damages against Mrs. Schiller were 'limited to the sum of Thirteen Thousand Dollars ($13,000.00)', the amount of the deposit that had been paid into court by Bushmiller's agent who had originally received it from Mrs. Schiller.

The Evidence

The pertinent facts as found by the trial judge can be summarized as follows:

Mrs. Schiller became interested in buying Mr. Bushmiller's property. Before submitting an offer she telephoned the Equitable Trust Bank on Wednesday 23, July 1975 to inquire about the possibility of a mortgage loan. She talked to a Mrs. Davis who was a mortgage loan officer for Equitable. Mrs. Davis advised her that a mortage loan would in all probability be favorably considered on the basis of a 20-year mortgage with 'ballooning' at the end of five years. Mrs. Schiller did not understand that the term 'balllooning' meant and at that time made no effort to find out. The next day, 24 July, Mrs. Schiller filled out a formal application for a mortage loan of $97,500.00, to be repaid in '300 months' (25 years). On the same day, Mrs. Schiller signed an undated contract of sale prepared by her agent, a Mr. Collins of Century 21, a real estate brokerage firm. Mrs. Schiller then left the Baltimore area to visit her sister in Connecticut.

On Friday, 25 July 1975, Mr. Collins submitted the contract offer to Mr. Bushmiller. As prepared by Mr. Collins, the contract provided that the time within which the purchaser was to secure a written commitment for the mortgage loan was 30 days. Mr. Bushmiller wanted that time period reduced to 10 days. Mr. Collins telephoned Mrs. Schiller in Connecticut and Mrs. Schiller agreed to the change by a telegram dated 25 July 1975. The change was made in the contract itself and initialed by Mr. Collins as agent for Mrs. Schiller. As thus amended, the contract was dated and executed by Mr. Bushmiller on 25 July 1975.

On Sunday 27 July, Mrs. Schiller left Connecticut and went to New Hampshire to visit her son. As found by the trial judge, 'when she gets to her son's her eyes are opened, first, as to what balloon mortgage financing means, and secondly, as to the problems involved in a large expensive house. She immediately calls off the Equitable Trust Company loan, and then does nothing more.' The record shows that Mrs. Schiller telephoned Equitable from New Hampshire on either 28 July, 29 July, or 30 July (probably 29 July) and cancelled her loan application. There is no indication in the record that she notified Mr. Bushmiller of the cancellation.

Mrs. Schiller returned to Baltimore in the late evening of 5 August, eleven days after the date the contract was executed. On 6 August Mr. Bushmiller's agent contacted Mrs. Schiller. The agent's testimony (which the trial court found to be uncontradicted) concerning her conversation with Mrs. Schiller was as follows:

'Then Mrs. Schiller told me that when she was in New Hampshire and talked to her son, he told her that it was unwise for her to buy this house. She said, (') I cannot afford it; this is ridiculous. He's shown me that I will have to pay capital gains on my house,(') which was not true because she was reinvesting the money; and I tried to explain this to her. She said, (') (W) ell, it doesn't-I just can't afford the house; (') and she said (') (I)t doesn't matter. ('). And when we mentioned the means of financing that we had available and the fact that it was savings and loans money available at the terms that she wanted, she said (') (T)hat doesn't matter, I'm not interested in buying the house; I can't afford it; my son has advised me against it.(')'

It appears that on 6 August, the day after her return to Baltimore, Mrs. Schiller also contacted Mrs. Davis of Equitable and told her she did not want a 'balloon' mortgage. On 7 August Mrs. Davis wrote to Mrs. Schiller as follows:

'Dear Mrs. Schiller:

Pursuant to our telephone conversation of August 6, 1975, I must issue a letter of decline in answer to your mortgage request.

When I was first approached by Mrs. Spilman of Piper & Co. concerning financing for you, I told her that it would appear Equitable Trust would help you based on a $100,000.00 loan written for 5 years based on a 20 year payout. The interest rate would be determined when the loan was presented for approval. Since, on your application, you have specifically requested a straight 25 year mortage loan and are not willing to consider a five year loan with a balloon payment, I must decline your loan request.

Thank you for the opportunity to be of service to you.

Very truly yours,

/s/Verna Q. Davis

Mortgage Officer' Also on 7 August, Mrs. Schiller's attorney wrote to Mr. Bushmiller's agent and to...